Apple (AAPL) faces an antitrust lawsuit from the Department of Justice alleging that the company engages in monopolistic practices in the smartphone and digital app markets. DA Davidson Managing Director Gil Luria joins Yahoo Finance Live to discuss the implications of this lawsuit.

Luria states that this lawsuit "is a big deal," noting that while Apple has been under regulatory scrutiny before regarding the App Store, the difference this time is that it "goes to the heart of Apple" — its iPhone products. According to Luria, the DOJ is accusing Apple of "a series of practices" designed to ensure that consumers continue to buy iPhones and not switch to Android devices. However, he says that if Apple were to mitigate some of the concerns raised, it would inevitably weaken the company's position.

Luria suggests that in the short term, investors have "little reason to think" the lawsuit will impact iPhone sales. However, in the long run, it could "loosen their hold on" the smartphone market in the US, impacting prices and promoting Android devices, which could pose "a big headwind" to the iPhone market.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

SEANA SMITH: Well, the Justice Department and 16 attorneys general suing Apple claiming that the tech giant violated antitrust laws by blocking its rivals from accessing both hardware and software features on its iPhone devices.

MERRICK GARLAND: We allege that Apple has consolidated its monopoly power. Not by making its own products better, but by making other products worse.

SEANA SMITH: And that was enough to send Apple shares into the red yesterday. It sold off on the news wiped over $100 billion off from its market cap in just one day. And you can see it also lower once again, today, we want to bring in Gil Luria. He's DA Davidson's managing director. Gil, certainly we saw a lot of jitters play out in the market yesterday on the reaction to that news. How are you looking at it? How big of a deal this could potentially be for Apple's business?

GIL LURIA: It is a big deal. So the difference between the regulatory scrutiny of Apple so far is that the scrutiny from the EU was about the App Store and access to the App Store. And mind you, that's an important part of Apple's business. It's the fastest growing business, the services business. But this goes to the heart of Apple, to the iPhone. The Department of Justice is coming after iPhone.

They're pointing out a series of practices that Apple has engaged in in order to make sure that people continue to buy iPhone and not buy Android phones. And if Apple has to remedy all those measures, even if they're successful in mitigating some of these impacts, it will by definition weaken Apple's hold, especially in the US iPhone market. Handset market for iPhones.

JARED BLIKRE: And how should investors be thinking about this, especially when it comes to the timeline because we think back to historical precedents like Microsoft that took over a decade to play out. Arguably two decades, I think it started in 1990. So we're talking about some very potentially long term play outs here. But and not necessarily pay outs, how should investors be thinking about the short term, the medium term, and the long term?

GIL LURIA: I think that's right. And I think that's a good analogy. And if you think about what happened to Microsoft, it's not that the office windows monopoly was broken. It still hasn't been even 25 years later. It's that Microsoft was limited in its ability to move into the next wave. Let's not forget Microsoft missed the move to mobile entirely and then was late to cloud, and that was a much longer term impact.

For Apple, also in the short term, there's little reason to think that it's going to impact iPhone sales this year. But if they do have to come back from and withdraw from some of those practices, it will over time in the medium to long term loosen their hold on the handset market, especially in the US. So iPhone prices may not be able to go up as much. It may make it more conducive for consumers to buy androids. Let's say for their kids. And if that happens over time, that is a pretty big headwind to that key iPhone market.